What changed
Earlier, banks had to renew frozen term deposits for a term equal to the original tenure. Now, depositors can choose any term for renewal. If the depositor does not specify a choice, banks must renew for the original term.
What it means for you
This gives depositors more flexibility in managing frozen deposits, aligning renewal with their liquidity needs. Banks must update their renewal request forms to include a term option field. It reduces customer complaints and operational friction for UCBs.
What you must do
- Update term deposit renewal request forms to include a field for depositor's chosen renewal term.
- Train staff to inform depositors of their option to choose any renewal term when requesting renewal.
- Ensure system logic defaults to original term renewal if depositor does not exercise the option.
- Review and amend internal circulars and procedures to reflect this revised instruction.
Who it affects
Primary (Urban) Cooperative Banks, Depositors with frozen term deposit accounts, Bank operations and compliance teams
What if the depositor does not specify a renewal term?
If the depositor does not exercise the option, banks must renew the deposit for a term equal to the original term, as per the earlier procedure.
Does this apply to all frozen accounts or only term deposits?
This circular specifically addresses term deposit accounts frozen by enforcement authorities. It does not cover other types of frozen accounts.